New York Federal Reserve's new rules may prevent stablecoin issuer Circle from obtaining loans from the Federal Reserve

ChainCatcher news, the New York Federal Reserve Bank (NY Fed) on Wednesday restricted the counterparty standards for its reverse repurchase agreement (RRP) program, which may prevent USDC stablecoin issuer Circle from obtaining loans from the Federal Reserve.

According to a press release from the New York Federal Reserve Bank, funds registered with the Securities and Exchange Commission (SEC) as "2a-7 funds" that are "organized for a single beneficiary" will generally be considered ineligible, and the Circle Reserve Fund appears to fall into this category.

Under the new rules, the fund composed of USDC reserves managed by BlackRock for stablecoin issuer Circle "will generally be considered ineligible for the New York Federal Reserve Bank's reverse repurchase program."

It is reported that Circle has placed approximately $25 billion in short-term U.S. Treasury reserves into a custom fund managed by BlackRock called the Circle Reserve Fund. According to an earlier press release from Circle and documents submitted to the SEC for the fund, the Circle Reserve Fund is exclusively for Circle's use and is registered as a "2a-7" government money market fund. (source link)